Share Incentive Plan Calculator
Model your SIP position across all four share types — see the after-tax value at 3 years, 5 years, and at different share price scenarios before you commit.
Forecast the future value of your employee share incentive plan by factoring in your monthly contributions, company matching shares, and estimated market growth.
Your employer is offering you shares, and the headline number looks appealing — but the actual value depends on how long you hold them, which tax bracket you’re in, whether the company matches your contributions, and what the shares do in price. A share incentive plan calculator runs those variables together and shows what the position actually looks like at 3 years, at 5 years, and at various growth scenarios — before you decide how much to contribute.
The Four Share Types in a UK SIP
A Share Incentive Plan (SIP) is an HMRC-approved all-employee scheme. Every SIP is built from up to four components, though not every employer offers all four:
| Share Type | Annual Limit (2025/26) | Who Pays | Tax Treatment at Acquisition |
|---|---|---|---|
| Free shares | Up to £3,600 | Employer — no cost to employee | No income tax or NI on award |
| Partnership shares | £1,800 or 10% of salary (lower applies) | Employee — from gross salary pre-tax | Income tax and NI relief at point of purchase |
| Matching shares | Up to 2 per partnership share (capped at £3,600) | Employer — awarded alongside partnership shares | No income tax or NI on award |
| Dividend shares | Up to £1,500 | Funded by dividends on existing SIP shares | No income tax if dividend reinvested within plan |
The 5-Year Rule: Where the Real Value Is
Every SIP share type has the same exit tax structure. How long shares stay in the HMRC-approved trust determines what happens when they leave it:
| Holding Period | Income Tax on Withdrawal | National Insurance on Withdrawal |
|---|---|---|
| Under 3 years | Full market value at withdrawal | Full market value at withdrawal |
| 3–5 years | Lower of: value at acquisition or value at withdrawal | Lower of: value at acquisition or value at withdrawal |
| 5 years or more | None | None |
The 3–5 year rule is worth understanding precisely. If you withdraw shares between year 3 and year 5, and the share price has fallen since acquisition, you only pay tax on the lower (current) value — not what they were worth when awarded. If the price has risen, you pay on the acquisition value, not the higher current value. The growth element escapes income tax entirely at this stage.
What Partnership Shares Actually Cost After Tax Relief
Partnership shares are bought from gross salary — before income tax and National Insurance are deducted. That means every £100 contributed costs less than £100 in take-home pay. The effective cost depends on tax bracket:
| Tax Bracket | Income Tax Rate | Employee NI Rate | Net Cost per £100 Contributed |
|---|---|---|---|
| Basic rate (up to £50,270) | 20% | 8% | ~£72 |
| Higher rate (£50,271–£125,140) | 40% | 2% | ~£58 |
| Additional rate (above £125,140) | 45% | 2% | ~£53 |
Matching Shares: The Multiplier Effect
When an employer offers a 1:1 match, the economics of a SIP shift dramatically. A basic rate taxpayer contributing £1,800 in partnership shares has an effective out-of-pocket cost of ~£1,296 after tax and NI relief. The employer then adds £1,800 in matching shares for free. Total shares acquired: £3,600. Net cost: £1,296. That’s a 178% return on the net contribution before the share price moves at all — and the entire position is income and NI tax-free if held for five years.
For a higher rate taxpayer on the same £1,800 contribution: net cost drops to ~£1,044. The same £3,600 of shares acquired represents a 245% return on net cash invested, again before any share price movement.
What Happens to SIP Shares If You Leave the Company
Leaving triggers different outcomes depending on the reason and how long shares have been held:
- Redundancy, retirement, disability, or death: Shares can be withdrawn without the early withdrawal tax charge — HMRC treats these as “good leavers.” All four share types are typically transferred at market value without triggering income tax or NI regardless of holding period.
- Voluntary resignation or dismissal: Standard withdrawal rules apply. Shares held under 3 years incur full income tax and NI on market value at withdrawal. Between 3–5 years, the lower of acquisition or withdrawal value applies.
- Matching share forfeiture: Many employers include a forfeiture clause allowing them to reclaim matching shares if you withdraw partnership shares or leave voluntarily within the first 3 years. Check your SIP plan rules — this varies by employer.
SIP vs. Other UK Employee Share Schemes
| Scheme | How It Works | Key Tax Benefit | Best For |
|---|---|---|---|
| SIP | Buy or receive shares, held in trust | Income tax and NI free after 5 years; pre-tax purchase | All employees; broad participation |
| SAYE (Save As You Earn) | Save monthly for 3 or 5 years, then buy shares at option price | Fixed option price; gain on exercise free of income tax | Employees expecting share price growth |
| EMI (Enterprise Management Incentives) | Options over shares, typically for key employees | No income tax on growth above exercise price if conditions met | High-growth companies; senior/key employees |
| CSOP (Company Share Option Plan) | Options at market value, up to £60,000 outstanding | No income tax on exercise if rules met | Broader employee base than EMI; larger companies |
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Income tax and National Insurance are eliminated if shares are held in the SIP trust for 5 years or more. However, Capital Gains Tax can still apply on any growth above the market value of shares on the date they leave the trust. The income tax and CGT exemptions are separate — you can have one without the other.
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Most SIP rules include a forfeiture clause: if you withdraw partnership shares within the forfeiture period (usually up to 3 years), the corresponding matching shares are returned to the employer. The exact terms vary by employer plan — some forfeit matching shares proportionally, others forfeit all of them. Check your plan documentation before withdrawing early.
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Yes. The £1,800 annual limit is a ceiling, not a requirement. Most plans allow contributions as low as £10–£50 per month. Contributing less reduces the income tax and NI saving but also reduces the employer's matching obligation — worth considering if your employer matches at a generous ratio.
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No. The 5-year holding period runs from the date each batch of shares was acquired, not from any subsequent price movement. Each purchase of partnership shares and each award of free or matching shares starts its own 5-year clock independently. Shares from different months or years may reach the 5-year threshold at different times.